haidi: welcome to daybreak australia. shery: i'm shery ahn in new york. sophie: i'm sophie kamaruddin. we are counting down to asia's major market open. ♪ haidi: here are the top stories we are covering. wall street's equity rally spotters to a halt on reports that the u.s. and china negotiators remain far apart on certain issues. president trump remains optimistic that some of his officials that beijing is pushing back at a range of american demand. the eu gives a brexit ultimatum,

asking what is the point of a delay? shery: that get you a check of the markets closing the tuesday session in the u.s. stocks go back earlier gains and halted that read this. the dow fell 1/10 of 1% after four sessions of gains. the s&p 500, little change, after one point topping the 2850 level for the first time since october. this on reports that u.s. officials are seeing china walking back some of those trade concessions. we have the nasdaq gained 1/10 of 1%, but the nasdaq biotech index for negative semiconductors also pare back earlier gains on reports that u.s. and china were still discussing some issues around pharmaceuticals. u.s. futures unchanged at the moment. we will see how we are setting up for the session in asia. sophie: futures are hinting at slight gains in tokyo, sydney and seoul, but we may have some

trepidation ahead of the fed's decision and some concerns that the u.s.-tradchina trade talks may have hit a speed the. off by half a percent as this morning we saw balance numbers from new zealand. the deficit widening 3% from the previous quarter. on the eco-agenda today from japan, we will get the boj meeting minutes and orders due out this morning. taiwan export orders on the agenda and we look at a policy decision from the bank of thailand ahead of the election. haidi: let's get to the first word news with jessica summers in new york. jessica: the eu is likely to tell theresa may that she must decide by mid april whether to extend brexit to 2020 or risk leaving the bloc in three months without a deal. ready to deliver an ultimatum. it would give the prime minister three weeks to decide whether to

gamble on forcing her twice defeated divorce bill through parliament or seeking launder extension. leaders meet in brussels on thursday. >> what would be the purpose and outcome of an extension? that at thensure end of a possible extension we are not back in the same situation as today? in any case, the european council will have to assess what is in the best interest of the eu. jessica: the department of transportation is calling for wide-ranging review of how the boeing 737 max 8 earned certification from regulators and the airline itself. the new been cruelly is separate from the criminal investigation that the inspector general was conducting in conjunction with the justice department. the 737 max was grounded globally following two crashes in five months that may be linked. the reserve bank of india says the country must stay on the

path of fiscal prudence, including what the governor calls "robust planning of expenditure." he long pushed for fiscal calm, but surprise investors last month by cutting rates and leaving the way open for more. the prime minister's expansionary budget ahead of months general election. bill gates has joined jeff bezos in the occlusive cindy billionaires club. his fortune has crossed the $100 billion threshold, that is according to the bloomberg billionaires index. gates last celebrity that mark bezos dot-com boom when was just beginning his climb to the top. bezos is worth more than $145 billion, having added $22 billion this year alone. global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts. i'm jessica summers. this is bloomberg.

haidi: some u.s. negotiators are concerned china are pushing back against american demand in the trade talks, according to people familiar, even as president trump continues to sound optimistic about reaching a deal. tom mackenzie joins us from beijing. you can see the reaction in the market overnight that it feels investors have price they good news resolution out of the trade wars, but a lot of uncertainty. what do we know? tom: you have to wonder why this was priced in given the complexity of the talks but what we're hearing from washington is that china was pushing back or at least backpedaling on some of its previous commitments. from the chinese perspective, they have put in place changes around its intellectual property, yet they have yet to see from the u.s. side and a commitment to remove tariffs from chinese experts. we have long heard from officials and sources in beijing that is a priority for chinese

negotiators, to get those tariffs removed. they have yet to secure that pledge because the u.s. sees that as a potential component in any enforcement mechanism. what we're hearing from our sources is that china had made pledges around the protection of data around pharmaceutical companies. they have not walked back from that. we have not heard anything apparently around linkages, something the u.s. was hoping they would be able to solidify with their chinese counterparts. more broadly on data services, china is not putting anything on the table around data services. there are a number of areas where hearing from our sources where china is either backpedaling or pushing back. it should be pointed out that we are hearing that are divisions. we have known there are divisions within the white house, within the u.s. negotiating team. those divisions remain over how concerned we should be. some saying this is just part of a regular negotiating tactic.

others say this is part of a strategic backpedaling and there is a heightened risk of concerned. shery: at least the president does not seem too concerned. president trump, what is he saying? tom: absolutely. president trump still seeming pretty upbeat when he was asked about this, a question shouted at him in the room when he was meeting with the brazilian president. he said talks with china are going very well. we know that trump is keen to get a deal to boost his election prospects, more so to give the markets a boost as well. he is under pressure, not just from within his own trade negotiating team and own administration, but also democrats as well. the likes of chuck schumer saying do not give up, make sure you get a decent deal. we know in terms of the timeframe, secretary mnuchin and ambassador lighthizer is excited to be in beijing on march 25. the talks, high-level talks with her chinese counterparts. we are hearing the vice premier

will then go to washington to continue those stocks. the timeframe, we are still hearing from washington, it will be fulfilled in the next few weeks but our major hurdles that remain. haidi: in terms of the fallout from the boeing drama, it looks like it may be overlapping into the straight talks in terms of beijing one of the first countries to ground the 737 max. now saying it could be excluded from the list of goods to be imported from the u.s.? tom: this is significant because in order to address the trade imbalance -- this has been a key concern from u.s. negotiators, to reduce that deficit -- than buying huge, significant, expensive parts of kit the u.s. was a part of that discussion. boeing and boeing aircraft were part of those talks, including the 737 max 8. the question is how you get to that number the chinese has pledged in order to reduce the

u.s. trade deficit if you strip out 7237 max's. beijingom mackenzie in with the latest on the straight talks. still ahead, just how dovish can we get? fed officials in washington for the march meeting. we will take a look at what signals we will be looking for. shery: next, we take a look at small caps with a portfolio manager for a $3 billion focus fund. this is bloomberg. ♪

haidi: we are counting down to the start of trading on wednesday morning in sydney. futures looking mildly optimistic after u.s. stocks, after reports that beijing is pushing back at key trade negotiations. we are also seeing uncertainty, treading water as we get bank of

thailand rate decisions, kicking off what will be a busy second half of the week for global central banks.i'm haidi stroud-watts sydney. -- i'm haidi stroud-watts in sydney. have been caps seen as a canary in the broader market. they were first to head self before the december selloff, now they are showing weakness again. we will turn to weigh fund manager with a winning track record. the portfolio manager for the $3 billion algers small-cap focus fund which is in the top 3% of its class. amy, great to have you with us. as the dominant themes in the market, you are looking at these macro trends, distracted by geopolitics, domestic politics in the u.s. or brexit -- how do you stay focused and look at company fundamentals and what

are you looking for at this point? amy: i think for our strategy, from the bottom up, stocks selections. we don't make any top-down costs. we are cognizant of macro. a lot of macro noises, such as trade noise and fed decisions, -- thelwinds for us small-cap stocks because in a rising interest rate environment, small caps outperform the large-cap stocks. u.s. small caps are very u.s. centric so they are relatively insulated from the trade talks. relatively insulated, but you do see certain companies that still are fairly vulnerable to some of these broader development. when you are looking at this 10 year long bull run, how do you find value in pockets of the market at this point? amy: that is a great question.

we are in a late stage. economy is not that easy and growth is very scarce. that is why we focus on very innovative small companies. the core of what we do is identify exceptional small companies that have powerful drivers that can outgrow the economy and become exceptional large companies. those companies undergoing positive dynamic change a lot of times are coming of age and under the radar. that is why bottom-up stock selection really works. shery: it was interesting to see the market movements. we saw the u.s.-china trade news, midday, u.s. stocks took a dive. was today a taste of what we could see globally if u.s.-china deal, the much and did -- much anticipated deal does not come through soon enough? amy: in that case, u.s. all caps will be a safe haven for investors because the headwinds

of the market are really tailwinds for u.s. small-cap stocks in a rising interest rate environment as well because as you know, they are very insulated relatively to the trade noise. also, particular u.s. growth stocks tend to do well he does a lot of them are really driven by it is a company that is in the cutting edge of innovation. to that extent, the u.s. will fare better than the rest of the market. shery: we are seeing volatility falling again after the fourth quarter selloff. this chart on the bloomberg showing how much really volatility has fallen. we are talking about fx, the lowest since 2014. will all of this change if we don't get to see a trade deal soon, if we continue to get these negative trade headlines?

what will move the needle here and how important is volatility for you? amy: that is a great question. i think volatility has ifinitely -- this strategy, always view volatility as our friend. it has worked very well in qr last year. we outperform the benchmark even though we had significant outperformance for the nine months because that is where focus on intrinsic value is very important. we stress test a lot of our scenarios and it is very important for us to have a solid their case. in extreme volatility environment, a lot of companies will be acquired because they become so cheap and it is a backstop for large companies of private equities. my experience as a small-cap manager to use volatility as our friend has always served us very well. keyi: i know two of the

risks that you highlight for the rest of this year's potentially policy, changen in fed central-bank policy and steeper concessionary conditions. do you think there is a power put in place? is that something that markets have to worry about? amy: i think for now, the fed is pretty dovish and on the sidelines. it is really the abrupt change that will spooked the market over a long run. , it will be measured. absolute basis come interest rates are very low. i do believe the fed will have measured and be patient. it should be fairly constructive for equity. what opportunities would ucf this point outside of the u.s.? amy: outside of the u.s.? well, i think --

haidi: that is right. amy: outside of the u.s., there are still companies that are driven by innovation, have powerful drivers because i think cyclical growth companies will be under a lot of pressure in this environment. we are in the late cycle so economic growth is not that robust. it is very hard to have the pricing power if one does not have any truly differentiating products or services. inflation, even though inflation is under control, eventually that will creep up. for companies that are very cap intensive, a lot of labor costs or material costs, it could be a problem. that is why it is very important to have the pricing power of companies that would do better whether it is inside or outside of the u.s. shery: we have the rate decision

tomorrow from the fmoc. we have seen the fed continuously preach patience. has that taken the fed out of the equation? amy: i think for now, the fed is probably going to be on hold. at least i don't think it will be any abrupt changes. it is really the rate of change that matters. i think there is still a lot of room in terms of absolute interest rate and still fairly low. that is still conducive for growth equities because growth equities have longer duration assets. shery: it was great having you with us. amy zhang. you can get a roundup of the stories you need to know to get your day going in today's edition of daybreak. bloomberg subscribers can go on your terminal. it is also available on mobile, bloomberg anywhere app. you can customize your settings see only get the news on the industries and assets you care about. this is bloomberg. ♪

shery: we are seeing the latest breaking headlines from the wall street journal. it seems that former vice president joe biden is now asking supporters that he is running for president -- he plans a 2020 did, asking for help from supporters in lining of contributions from major donors so he can quickly raise several millions of dollars. this was a much anticipated event. this will really open up the chapter for the democratic primary. we were expecting the announcement very soon, but this now coming as joe biden tells supporters that his running for president. we will get you more details as we get them. hiaaidi? haidi: when it comes to streaming tv, the entire industry could argue there is netflix and everyone else. that is set to change as apple now joining in the freight. to find out where this leaves the television industry, want to

bring in our next guest. founder of the usa network, basically the basic cable model that has become a standard. it is a pleasure to have her here in the studio. how much has changed? >> everything is changing now. it is an exciting time actually i think. streaming media has really taken a big position and i think a company like netflix really has changed the viewing patterns of people with sort of the download timentire series at one and people are getting very used to that. i do think that television, cable television networks still have a very prominent position in the media landscape and will for some time to come. it is just that i think that the multiple revenue streams that media is using are necessary to support the business now, not just simple advertising but many other streaming revenue sources

have to be brought to bear. haidi: it has become a very crowded space. everyone wanting to get a piece of this new model and people investing heavily in original content. you think that netflix is still above and beyond the rest? kay: in the streaming media, for sure. they have a large position on the international market and domestic market in the u.s. when you have 140 million subscribers paying you every month directly and not through a third-party, such as a company a streaming network, they have to start with the direct consumer and i have started it but way far beyond. you see disney and universal, different companies that are opening up their own streaming media direct to consumer, but they have a big gap to cover. shery: they will have to what one point decide whether or not

they want to run advertisements on their platforms. how challenging will it be to protect that legacy system? kay: that is always difficult. china makes a transfer, you are in a sense trading dollars for dimes in terms of the television networks and cable television networks. they are going to try to protect that advertising revenue, for sure. but they also have to but the digital media and the direct to consumer management that they are developing, those are very important to pinpoint the consumer, the viewer of all of these different media products. it is going to be quite a challenge, i think. some will keep advertising in the streaming. some of the only direct payment. you will see these different models evolve. we will see which one really takes hold with the consumer, but i do think that the mobility

and the movement to the smartphone and tablets will be dominant in years to come. advertising is a little difficult, more difficult on those devices. shery: we are seeing some bumps in the ratings road. how resilient has advertising and pricing remained so far? kay: i think the pricing on the advertising has been growing steadily. we see that at least in the united states that advertising revenue to the television, cable television networks has continued to grow year-over-year. it may -- the growth curve, but that will still be substantial. it is still substantial for brand recognition, for the advertiser. there are differences between that and pinpointing that direct consumer through a streaming medium. there are differences in what

the perception is of the person that is looking at the ad. i think it is going to cross over at some point in time but i do think the media of television and cable television will continue to have good advertising for the foreseeable future. haidi: you are focused particularly in australia with springboard which just celebrated international women's day. an interesting article talking about the different language that venture capitalist funds use when it comes to fundraising for female versus male entrepreneurs. in terms of bias and other issues, do you think enough progress is being made and what is your number one strategy getting past that? reallyll, i think it is training of women to hear the keywords and how to respond to them. when people ask you negative questions, people have more of a propensity to ask women about their past performance and how they will justify their numbers

and projections. they ask women those questions were often than men. i think women need to deflect it. haidi: we have to leave it there. ♪

shery: you are watching daybreak australia. let's get the first word news with jessica summers. jessica: president trump continues to sound optimistic about trade talk, yet some u.s. officials are becoming concerned china is pushing back in american demand. we are told beijing has shifted its position because after agreeing to changes in i.p. policies, it has not received assurances from the u.s. that tariffs would be lifted. china is trying to bring in wording to the agreement that would comply with chinese laws. the number of workplace industries -- injuries at tesla

increased nearly threefold last year compared to 2017. it is seen as an indication of how much strain workers were under. tesla's california robbery lot more than 22,006 days. two thirds came from repetitive stress issues and implement programs to improve. leader for life has announced his resignation as president. that signals the start of a long transfer of power after nearly three decades as ruler of central asia's largest energy producer. runsultan has kazakhstan since 1989 and has been it's only president since independence in 1991. russia says the move comes as a surprise. hong kong is digging deep to try to alleviate its worsening housing shortage. the government will spend $80 billion to reclaim lands for

artificial islands and new homes. the islands will be created off of the home of hong kong airport and disneyland. the development secretary says ministers have checked the coffers and hong kong will not go bust. global news 24 hours a day on air and on tictoc, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jessica summers. this is bloomberg. haidi: that see how we are setting up for the asian markets and the traders sophie kamaruddin. sophie: asian stocks can be set for modest gains but we are seeing some caution in new zealand, extending losses down half a percent perhaps after the event on wall street peter out on conflicting views on whether or not the u.s. and china are at odds in trade negotiations. we are waiting on the fed decision. i want to jump to the terminal to see what has been happening in that space. we have some diversion views in

the camp of the fed which could signal a possible rate hike as early as may as the u.s. economy is improving. the 10 year yield moving back towards 3%. emerging-market investors will be watching the fed decision. that will likely push more money into e.m. assets. the recently renewed enthusiasm asset the index to the highest level in more than five months. that is noted by the white line on this chart. it is continuing to outperform. in the e.m. space, it has become more conscious about china reducing their exposure to the world's best performing market after more than 20% rally this year. msci aimism over the share conclusion is misplaced, but they have skepticism over china's piles of corporate debt. shery: thank you for that. in the u.s., the federal reserve is a good did you double down on its dovish policy tilt when it

wraps up its latest meeting wednesday. wage growth and inflation of the first half of the year. kathleen hays is here with what is on the radar. so, why our markets at the moment convinced that we will actually get the fed to lower its rate hike forecast? kathleen: december, markets were shocked. fed does not signal anything. january, all of a sudden, wait and see. they don't have to do anything but they left that dot plot consensus forecast for 2019 in place. some people were even angry about that. nevertheless, since then they that very dovish turn, we see that growth numbers have come in weak. i want to jump into a chart, the city economic surprise index in the u.s. which is firmly negative now. it iss behind this drop?

showing the are more negative surprises in the economy. jobs growth pulled back in february. it may be temporary. industrial production got weaker as well. all of this supports that kind of thing. jay powell said himself that he can see growth at just over 2% this year, with about 3% in 2018. not anything to worry about, but definitely a slowdown. haidi: the white house does not necessarily agree. tax cuts boosted investment, growth topped 1%. does this sound like sound economic analysis or policy coming into the fray? kathleen: this is the president annual economic report. they are saying yes, the first quarter was weak but the rest of the year looks good. the council of economic advisors told bloomberg earlier that tax cuts have stimulated business investment, productivity and

boosting workers' wages. >> we've got a recovery that is long in the tooth and accelerating. that is the sweet spot for the american worker. i think that is the headline of the report. the state of the economy is strong and serving well to those who most need it. kathleen: the atlanta fed has gdp tracker looking at growth coming in at 0.4% in the first quarter but everybody says it is temporary. one more chart i want to put on the table that would suggest maybe the fed does have to think twice about reducing its forecast for rate hikes this year, because the stock market has been rallying like crazy in 2019. financial conditions, let's take a look at this chart. they have gone from being temporarily and seriously read when stocks were plunging, now back in the green. the fed wants to reduce its dots as things continue to pick up. what would that mean for the rate hike forecast? they have to shift it again.

we will find out the answers about 18 hours from now. haidi: looking forward to it, kathleen hays. german chancellor angela merkel says she will fight to the very end for an orderly brexit after theresa may's strategy hit a major roadblock. she spoke exclusively to bloomberg of the global solution summit in berlin. we will very carefully follow events, follow what the british government is going to say with regard to what was stated yesterday. i will not say anything on how the situation will present itself on thursday. >> you have to presume she will come and ask you for an extension. do you have any prejudice on your side? would you like to have a short extension so it does not affect the european elections or would you like to give than a year to sort out the problem?

absolutely want to do -- i am very interested in having a very good relationship with britain even after they had left the european union. it is in the german interest and certainly the interest of the 27 member states. i take theresa may very seriously when she says britain stays in europe, it will leave the european union. we have common interests because of our geopolitical situation. britain has always been a country that has felt very much committed to the principle of multilateralism. we have internal security and defense, but also internal security. that is why we made provisions for the citizens to have as clear legal situation as possible even in the event of no deal that will only invariably be the second-best solution, until the very last hour of the

29th of march, i will fight for brexitrly -- an orderly and orderly leaving of britain from the european union. we don't have that much time left but a few days. i must say i am not in position to speculate what i will do because it depends on what theresa may will tell us, what the situation is in that parliament by the time. we will adequately, together as 27 three activists, the easier it is. haidi: that is german chancellor angela merkel talking to bloomberg in berlin. australia will reduce the number of migrants it accepts annually by 15%, 160,000. that is roughly in line with it number of permanent migrants accepted in 2017 to 2018. that you to our australian government reporter, jason scott.

can you give us more details on how the policy is changing? is this something that scott morrison is banking will be popular with voters? jason: yeah, i think he will be taking it will be popular with voters, especially in the big cities which have had some problems. brisbane and the big cities where the majority of migrants are attracted to living when they move here. of course, those cities have been coming under some sort of pressure as far as the infrastructure goes. transport infrastructure is under stress, including roads that are clogged and basically the public transport itself, and also this is, economists say this is contributing to the low wage growth as well. and also, exacerbated the housing pressures. i think he is banking this will be popular, especially among the

cities. shery: what are the chances this will backfire and in fact damaged the economy? that. i don't know about the rate has gone down quite considerably in recent years to about 160,000 which is in line with the new cap. it should not obviously, immigration growth in australia has been one of the drivers of australia's 28 consecutive years of economic growth. it does not want to jeopardize that. it does not want to jeopardize that at all. the other interesting part of this new policy is going to be encouraging or basically forcing some of the new migrants to live in regional areas outside of those big cities. cities,eople living in small regional towns and to live there for three years at least until they can apply for

permanent residency. the idea of it behind that is these small towns have struggled to attract skilled migrants, mainly because there are not that many jobs. it will be interesting to see if this works is a policy as well. haidi: our australian government reporter, jason scott. much more to come on daybreak australia. this is bloomberg. ♪

haidi: let's go out more on what we are watching in asia. adam is here in sydney. bond yields under pressure. the last time when this typically happens, you expect the rba to cut and subsequent markets. adam: the question becomes is this priced into markets, is the 25 basis points from the rba later on in the year priced in or our we talking about the

potential for 50 basis points? you cannot get away from the gloomy news about the australian economy and that is really what a lot of people are still contending with. the minutes showed us from the rba yesterday that are still very, very serious problems dragging on the economy going into an election in a few months. it is a very tricky outlook. the chart shows it pretty well. with a three-year yield the now below the rba's cash rate. this is an economy and bond market that is seen as a proxy for its relationship with china and chinese growth. what more does it tell us about not just an ailing domestic and economy, but the struggles the world's into a greater extent? investors are prepared to continue to push these yields and government bonds below where the cash rate is in the central bank. it is a pretty gloomy outlook and it continues to be, every incremental data point seems to add to that which does suggest

you do get some chance of a short squeeze if we get some improvement in economic data points but certainly for the moment, for australia and as it pertains to a proxy for china, certainly it signals a further tough time ahead. shery: seems like there are tough times for european stocks as well, it becomes the most crowded trade. we know that the ecb just unleashed a fresh round of stimulus, so was pessimism just overdone? adam: a couple of things going on here. in the latest bank of america merrill lynch survey come of the most crowded trade they said was a short european equities trade. people betting against europe. that is in the context of european stocks having a pretty decent run of late. you can see the tail end of that chart, that is the rally we have seen. what we are seeing is some idea

of a contrarian trade happening where traders are willing to go against the grain, starting to pick up a reward here. as you say, pessimism is really tightened for european assets at the moment, with german bund yields testing the zero level or close to it. european equities coming come off a really tough year last year. signs that that is reversing. i think what we saw in bank of america-merrill lynch survey overnight was that pessimism may have reached some kind of climax now that that is the most shorted trade if you look back in the history of that survey when assets get into that category. it does often a signal a bit of a turnaround. that rally we have seen in europe's in stocks, there is a question on whether that can build and whether this pessimism is pretty much baked into the price at this point. shery: thank you so much for that. adam haigh. you can check out his charts on

the library on the bloomberg. former vice president joe biden has reportedly told supporters he is running for president. the wall street journal reports biden is seeking to raise $7 million -- several million dollars and fast. joe, if we get this conference, this would mean the last major piece for the democratic primary race what really fall into place. joe: right. people enter the race as the front runner immediately. he has been leading in all of the polls. he is a very popular in the democratic party. he also has the glow of having been the vice president of former president barack obama. the test will be whether that can be sustained and he is going to be able to draw on some of the big money democratic donors, but a lot of the energy in the democratic party right now is with the small donors and

whether he can get the grassroots support that has really driven up the donations for people like bernie sanders who is typically in second place in those polls and former texas representative beto o'rourke. he has got a lot of advantages, but he also has some liabilities going into a campaign. haidi: certainly, there is some concerns, perhaps rivals like beto and bernie have raised so much money in the first 24 hours. joe with the very latest that the report that joe biden is running. against a backdrop of global trade tension, canada's government has delivered a pre-election that relieves deficit unchanged. the finance minister unveiled his fiscal plan in ottawa. bloomberg's josh is there now. josh: thank you for joining us. of one of to ask you about the growth picture for this budget.

we have a lot of trade tensions globally between the u.s., china. canada is caught in the middle. how much does that factor into your forecast? >> our forecasting is driven by private sector economists. we need to be careful to make sure that we have the resiliency we need in the face of anything that might come our way. our budget was a prudent approach to stay on fiscal track and improve it from where we have been. that you knowe put some money into infrastructure in the short-term that we think will be important for the economy, obviously important for infrastructure projects around the country. we consider the context but may decisions that are consistent with what we have done from day one. investing in middle-class canadians, thinking about how they get skills for the future. these are things that are important for canadians. josh: how close is canada to

those trade tensions right now? >> trade tensions impact the global economy. so, there will obviously be a knock on canada should the trade agreement with the u.s. and china be positive. there will obviously be challenges if it is extended. i think what we really have in canada is a situation where our economy is actually performing pretty well. we are getting through the oil price changes in last year. underneath that is the lowest on a plummet rates we have seen in 40 years. -- unemployment rates we have seen in 40 years. it is generating strong returns for the government and families. our job now is to get the people that are working optimistic about training for the future and investing so we can continue with an economy that is working. josh: while we're on the china issue, canada caught in the middle in the huawei part as well. have you seen an impact on exporters that might take a bite out of the canadian economy?

we have seen reports of shipments being turned away. how big of a problem will that be, the huawei factor? >> we have to keep watching it. china is an important trading partner for canada. there are many things we trade back and forth in. what you are seeing are specific issues. i will tell you we will continue to try to work to improve our relationship from where it is. recognizing that the challenges are real and we need to work through them. josh: i want to ask about one of the measures in this support for pact as well as the eu trade deal. $3.5 billion to canadian farmers, essentially more with the north american free trade deal. how worried are you that the values of farmers would be hurt by these trade deals? >> what you have seen as do is recognize that the farmers that

were impacted by those trade deals have purchased quota are in the supply manage system. the previous government made a commitment of $2.4 billion in production and another $1.5 billion in protection against quota reduction and quota value. we said we will match those values because promises promises. we will continue to discuss with the sector how we can best allocate that. moving forward, we need to continue to think about how that system works to the advantage of canadians. with a usmca, we will have to see that continuing discussion with farmers to make sure the are treated fairly. josh: any risk of blowback from a country like japan that might see that as a subsidies to help farmers in the market that they now just gave back? >> we think we always have to consider those issues, but in reality, we have been pretty clear all the way through. the previous government did telegraph this.

we have a system we need to compensate people for the opening in that system and do it in a way that makes the system more efficient over time for canadians. that is the conclusion we have come to. we think it is a great thing for the sector and the right thing for the country. josh: you made the global skills program permanent also. how has that been working and what is canada need that program? >> one of the things that people around the world's he is that canada is a great destination for people to come if they are talented and highly effective in their field and endeavor. we have been very clear that we want to enable businesses to get people here rapidly. a global talent approach has been very successful. now we are saying it is a permanent part of our system where we will allow businesses to get here rapidly if they need those talents. this is just demonstrating we will be friendly to businesses that are meeting people from around the world so they can grow their business and i think

it will reflect well on our country and help businesses be successful. a lot of the crisis was about a government concern about job losses, but potential relocation. how big of a concern is that now because that company's shares are declining substantially since these discussions took place? how are you worried about them? >> i don't spend my time being worried about an individual company. i'm always worried that sectors can be important and the business environment in total is important and we have the ability to create and sustain great jobs. thatver i see any business is not able to do that, i worry about that. my job as finance minister is to make sure all the people in our government understand how important it is we have a healthy economy, that we have great jobs and i will continue to do that. we will certainly always think about how we can be effective in providing the kind of

environment that businesses need to be successful. >> finance minister bill morneau, thank you. shery: thank you so much for that. of course, we will get a preview of the market open in australia and how we are setting up for asia. here is sophie kamaruddin in hong kong. sophie: stocks in sydney setting up for a muted start to the cash trade, while the aussie dollar is steady after slipping on new trade concerns. stock to watch. may be moving after the takeover offer is the best and final bid. pharm on the radar after posting a loss in the first half of the company, bracing for tough conditions. a formula maker may come under pressure after posting a 10% drop. shares we are seeing in wellington is down more than 12% this morning. declines shares posted

in first-half revenues and earnings which the chairman chess it is putting a hard look on the business. we could expect more divestment. haidi: thank you so much for that. shery: plenty more to come on daybreak asia. we will be joined by chicago schools professor and former fed governor to look ahead to wednesday's policy headlines. we have the fomc rate decision coming up on wednesday, not to mention the boe decision on thursday as well as a slew of asian central banks deciding on rates as well. haidi: that is right. picking up the bank of thailand today. not expected to make any policy moves ahead of the general election this weekend. a little bit to the downside when it comes to kiwi stocks. the kiwi dollar at 68.55. the u.s. dollar falling to the lowest in about three weeks. still, the aussie has been underperforming. .7089 is where we are holding. sydney futures treading

water at the start of cash trading. much more to come on daybreak asia. this is bloomberg. ♪ this isn't just any moving day.

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haidi: very good morning. i am haidi stroud-watts in sydney. australian markets have just opened for trade. shery: i am shery ahn. sophie: i am sophie kamaruddin in hong kong. welcome to "daybreak asia." haidi: our top stories this wednesday, the wait and see moment as markets look to the fed. there is concern the u.s. and china remain far apart on trade. president trump remains optimistic. officials are saying beijing is pu